Aerospace Supplier Loar Crushed Earnings Estimates. There Is Only 1 Problem.

Loar Holdings is a relatively small, fast-growing aerospace supplier. (Dreamstime)

Key Points

• Loar Holdings reported adjusted third-quarter earnings of 35 cents per share, a 133% increase year over year.
• The company raised its 2025 sales guidance to between $487 million and $495 million and adjusted earnings to between 93 cents and 98 cents per share.
• Loar Holdings projects 2026 sales between $540 million and $550 million, with adjusted earnings between 98 cents and $1.03 per share.

Aerospace supplier Loar Holdings reported better-than-expected earnings, raised its financial guidance, and offered a solid outlook for 2026.

There isn’t much to complain about, except perhaps the stock’s valuation.

On Wednesday, Loar reported adjusted third-quarter earnings of 35 cents a share, up 133% compared with the prior year’s quarter. Sales were $126.8 million, a 22% jump from the year-ago quarter.

Wall Street was looking for per-share earnings of 22 cents and sales of $125.5 million.

Loar stock traded as high as $80.41 but closed at $71.35, down 2.6%, while the S&P 500 and Dow Jones Industrial Average rose 0.1% and 0.7%, respectively.

Management’s guidance helped initially. For 2025, Loar now expects sales to land between $487 million and $495 million, up from a previous range of $486 million and $494 million. It’s a small boost, but the $493 million midpoint is just ahead of the Street’s consensus forecast.

Adjusted earnings are now expected to land between 93 cents and 98 cents a share for the year, up from a previous range of 83 cents to 88 cents. Guidance is up a dime and implies fourth-quarter earnings of roughly 20 cents a share, close to what Wall Street projects.

“The strong tailwinds of secular growth in commercial passenger traffic, immense backlogs at the airframe manufacturers, and global demand for defense products once again led us to a record quarter,” said CEO Dirkson Charles in a news release.

The strength is likely to continue in 2026. Loar expects sales between $540 million and $550 million. Wall Street currently projects $554 million. Adjusted earnings are expected to land between 98 cents and $1.03 a share next year. Wall Street currently projects $1 a share.

At this point, the biggest headwind facing Loar might be valuation. Loar stock trades for about 77 times estimated 2026 earnings.

Still, Loar is a relatively small, fast-growing aerospace supplier with an opportunity to add more growth through mergers and acquisitions. What’s more, companies with growth that also beat earnings forecasts and raise their financial guidance typically have above-average price/earnings ratios.

Over the coming two years, Wall Street expects earnings growth of about 20%. Those estimates might be heading higher after the strong third-quarter report.

Write to Al Root at allen.root@dowjones.com